Dairymen Using Cheaper Rations, Cutting Fat Content
Published: Friday, April 3, 2026
More cows produce more milk. USDA's latest data illustrates that as February production totaled 18.255 billion pounds, up 2.9% from February 2025. The 24-state total, at 17.559 billion, was up 3.1%. Most of the increase is attributed to increased cow numbers, but the rising tide may be slowing some as this was the smallest year-over-year increase since May 2025.
StoneX broker Dave Kurzawski said, "Protein content was higher at 3.45% but fat content is not growing as much year-over-year at just .5% growth. Component-adjusted production still appears to be expanding, but changes are being made on farm as a result of farm-gate price declines through the second half of 2025."
"Farmers have likely been adjusting feed rations somewhat to cut costs, which is the likely driver behind slowing fat content growth," he said. "That hasn't stopped expansion of the herd, however. Beef prices are still strong and with milk prices recovering, there's not a strong incentive to cull cows yet."
January milk output was revised up 40 million pounds to 19.850 billion, 3.4% above a year ago, instead of the 3.2 originally reported. The 24-state total was upped 37 million pounds, to 19.095 billion, up 3.6% instead of 3.4%.
February cows totaled 9.615 million head, up 15,000 from the January count, which was revised up 20,000 head, and was up 211,000, or 2.2%, from a year ago. The 24-state count hit 9.183 million, up 13,000 from the January total, which was revised up 16,000 head, and is 217,000 head, or 2.4%, above a year ago.
February output per cow averaged 1,899 pounds in the 50 states, up 12 pounds, or .6%, from a year ago. The 24-state average, at 1,912 pounds, was up 13 pounds, or .7%, from 2025. January averages were not revised.
California cows put 3.2 billion pounds in the tank in February, up 74 million, or 2.3%, from a year ago, following a 4.4% gain in January. Cow numbers were up 3,000 head and output per cow was up 40 pounds from a year ago.
Wisconsin output hit 2.5 billion pounds, up 69 million, or 2.8%, thanks to 25,000 more cows and a 15-pound gain per cow. Idaho was up 3.5% on 24,000 more cows. Output per cow unchanged. Indiana was up 4.8% thanks to 8,000 more cows and a 10-pound gain per cow. Kansas continued to show the biggest percentage gain, up 97 million pounds, or 28.7%, from a year ago, on 51,000 more cows and a 5-pound gain per cow. Michigan was up 4% on 17,000 more cows. Output per cow was up 5 pounds. Ohio was up 1.6% on 4,000 more cows. Output per cow was unchanged.
U.S. butter stocks jumped again in February but were below those a year ago for the 11th consecutive month. The Agriculture Department's latest Cold Storage report showed the February inventory at 253.8 million pounds, up 27 million pounds, or 11.9%, from January, following a 27.8 million pound jump in January from December, but were 52.1 million, or 17%, below those in February 2025. The January total was revised up 11.3 million pounds from last month's report.
American-type cheese stocks fell to 784.9 million pounds, down 8.2 million, or 1%, from the January level, which was revised up 739,000 pounds, and were down 20.6 million pounds, or 2.6%, from a year ago.
The "other" cheese holdings crept to 578 million pounds, up 12.2 million, or 2.2%, from January, and up 6.3 million pounds, or 1.1%, above a year ago. The January total was revised up 1 million pounds.
The total cheese inventory hit 1.387 billion pounds, up 5 million, or .4%, from January, but 13.7 million pounds, or 1%, below a year ago. January's total was revised up 2.2 million pounds from last month's data. The report is seen as bullish for both butter and cheese as U.S. exports continued to keep product out of the freezer.
Checking Chicago, block Cheddar cheese, after jumping 13.25 cents the previous week, headed lower this week, and closed the last Friday of March at $1.5825 per pound, down 8 cents on the week and 5.25 cents below a year ago. The barrels finished at $1.5650, down a half-cent on the week, and 7 cents below a year ago. Sales total 22 loads of block on the week and two of barrel.
Central region contacts tell Dairy Market News that milk output is steady to higher. Upper Midwest cheesemakers report spot milk is plentiful, due to downtime at nearby processing plants. Spot prices ranged $6-under to flat class at mid-week. Cheese production was stronger this week. Plants with downtime due to last week's snowstorm were running full schedules this week. Demand for cheese barrels is steady. Retail sales are strong, but food service demand is light. Export interest is declining due to increasing transportation costs.
Seasonally strong milk production in the West is more than sufficient for cheese manufacturers and cheese production is steady, says DMN. Some noted increasing delivery and packaging material costs. Contacts indicated that production is heavily geared to fulfilling contractual sales well into second quarter. Domestic demand is steady to strong. Demand from international buyers is mixed and export demand for Mozzarella is keeping domestic availability somewhat tight, according to DMN.
Butter started the week slipping 2.50 cents to $1.7750 per pound, but reversed and climbed to $1.8450 last Thursday. It ended last Friday at $1.8250, 2.50 cents higher on the week but 52.50 cents below a year ago. There were 120 sales on the week, highest since the week of June 9, 2025, with 45 on Wednesday alone.
Cream production is strong in the Midwest, and contacts say Class II and III processors are pulling in ample volumes, keeping inventories snug. Recent snowstorms caused some downtime in the Midwest, but butter makers were running full schedules. Contacts report strong retail butter sales ahead of the spring holidays, but food service demand is tepid. Export interest has softened in recent weeks, as transportation costs have increased, says DMN.
Spot cream is tighter in the West, with stronger demand from Class II and III manufacturers. Demand from butter makers is moderate. Churns remain heavily active. Traders indicate some old crop loads, in terms of CME timing cutoffs, were available. Domestic butter demand is steady but mixed from international buyers and 82% butter is more available.
Grade A nonfat dry milk continued its trek higher for the third week in a row and hit $1.9375 per pound last Thursday, highest CME price in 12 years, April 8, 2014 when it was at $1.9975. It gave back 1.50 cents last Friday to close at $1.9225, up 5.25 cents on the week, and 76 cents above a year ago. There were 46 CME sales.
The Daily Dairy Report's Monica Ganley Quarterra wrote in the March 20 Milk Producer Council newsletter, "The dramatic increase in NDM prices continues to be a supply driven phenomenon. Even though milk is long, powder is short as skim solids are consistently being routed to alternate uses. Increased demand for ultra-filtered milk as well as spoonable Class II products continues to limit the condensed skim available for dryers and is expected to keep milk powder production constrained over the coming months.
"Demand has been stable, but market participants report that even though contracted volumes are being delivered, there are no spot volumes of milk powder to be had. Export demand for U.S. product was upbeat late in 2025 and into 2026 but the price rally has rendered U.S. product largely uncompetitive with other global suppliers and export prospects are likely to suffer, as a result."
Dry whey closed last Friday at 69 cents per pound, up 3 cents on the week, and 19 cents above a year ago. There was only one sale on the week.
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